August 12, 2022

New class action against Robinhood alleges oligopoly manipulation

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Robinhood, the stock trading app formerly popular with millennials, is facing another class-action suit, following its recent temporary suspension of purchases of GameStop and other “meme-stocks” through its platform.

The lawsuit, filed Jan. 29 in Houston, Texas, alleges that Robinhood, along with other named defendants including TD Ameritrade and WeBull, arrived at “a common understanding of what must be done, which they carried out with conscious parallelism.”

Conscious parallelism, in competition law, refers to behavior in which competitors in an oligopoly set prices or terms without a formal agreement. One entity will take the initiative in setting a price, while the others follow suit, as a departure from that behavior could threaten market share and lower profits.

“In short, the situation that was unfolding was a threat to traditional players in the finance industry, many of whom were Defendants’ largest customers, and it could not be allowed to continue.”

Robinhood and several other trading platforms suspended trades in a number of stocks, which were being targeted through a crowd-sourced collective purchasing strategy.

This had initially been proposedTitle: New class action against Robinhood alleges oligopoly manipulation
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Published Date: Wed, 03 Feb 2021 12:59:39 +0000